This is an income investment. Price will be based on yield. A few days ago the company came out with guidance for lower 2012 distributions. The price therefore has to decline enough to bring the yield back into line based on that lowered guidance. Income investing 101 - silly to talk about manipulation. Was it manipulation that the company reduced guidance? The annual turnaround that factored into the reduced guidance has been clearly publicized ever since the IPO (and discussed on this board before) - but people don't do research and then act all surprised.
The so called "turn around expenses" are a normal and regular part of the business. So for management to suddenly lower guidance based on that assumption, as if it were a surprise, or an unknown, is disingenuous. Their competitors have the same operational expenses yet do not do this.
Is it incompetence? I don't think so, which is why I sold out the day they announced. As I suspected and said at the time, there is something else going on. That something else is defense against Carl Icahn.
Say what you like but MLPs are priced on yield.
Even the analyst price targets are based (largely) on future expected distribution amounts then applying a yield calculation to get the target price.
....another viewpoint beyond mine.
We are not saying that dividend-paying common stocks do not have their place in a well-rounded portfolio. They certainly do, and many studies have shown just how important such stocks are. But common stock has, and always will be, primarily a means to generate a return on invested capital. And dividends are a way to achieve that return on your investment. But they should not be seen as the actual goal of investing.
Common stock needs to be treated for what it was designed for, capital appreciation."
Keeping my stock, sold may 25 calls when the stock hit 27 to protect my investment. Feel the stock will drift down to 23-25 range. Will buy more if it goes below. Even at 1.75 per year like the dividends. I also like the fact that dividends will tied to fertilizer prices which I feel will trend up over the years because of food concerns.
I thought about the 25 covered call, but I don't want the shares called away and then have to pay income tax to IRS already. So I will hope for a bounce in the stock and then sell calls with higher strike price.
lasvegas...Now doing the same as you.
I had been trading uan from its start and had 4 good trades. Now moved it to my IRA and sold the 30 May calls for $1.40 a couple of weeks ago. If the premiums can get back up then I'll do that again. Between the $1.65 distribution and say $2 for sold calls the return sans cap gains is pretty good.
Hopefully i don't wind up having to sell $25 calls
I sold out at 26.25 a share with a 15% profit. I think we are headed into some bumpy roads in the up coming months and this stock could drop to the low 20s. However if you have no concern over the short term I agree with you that it will eventually trend higher. Thats why I intend to buy back in on the next big dip.
The payout was too high out of the gate. No way they should have been paying a 58 cent divi.
Too many are jumping into these high yield (8%+) stocks treating them like their super CD's. When the yield drops they run for the exits. Ironic thing is they should have been exiting before the cut not after. Happens with all these hi divi payers. Now is the time to enter as the pps will be more stable.
I have been watching and waiting for a divi adjustment before making an entry. A 50 cent divi can be supported but still a bit high as it leaves little for capital expansion.
Could you provide a link to the lower guidance? I see guidance of $1.92 in connection with it's IPO.
see what I mean - people don't follow the company announcements and then act surprised when the price moves.
The IPO guidance was for 2011. Hello, this is 2012 now. Here is the announcement of Q4 and FY2011 results released a few days ago.
In it, you find this statement:
"For calendar year 2012, the company's guidance range for distributions is $1.50 to $1.75 per common unit."
At an 8% yield, that equates to a price range around $19-$22.
If you want to blame anyone for the price drop, blame the company.
In other words Lisa, you expect the price/share to drop $18.75 to $25.00 a share based on 8% distribution a year?
So guys, don't rush buying this dog. Wait for the shorts to make money then place your bet.